India and the US are set to hold ministerial-level talks this week to take forward the first phase of their proposed bilateral trade agreement (BTA), with US Trade Representative Jameson Greer arriving in New Delhi for two-day talks with Commerce and Industry Minister Piyush Goyal.“My counterpart is coming to Delhi tomorrow to discuss the US trade deal,” Goyal told reporters in Mumbai, as quoted by PTI.The high-level engagement follows chief negotiator-level discussions held in New Delhi from June 2 to June 4, and is expected to focus on finalizing the framework of an interim trade agreement.Commerce Secretary Rajesh Aggarwal recently said that the discussions between the two ministers are likely to focus on finalizing the framework agreement.On June 5, Goyal had said that India and the US were moving towards closing all open issues in the interim agreement and were likely to execute the “very, very vibrant” first phase of the BTA by the middle of next month.
Why do the next few weeks matter?
The talks are important as the 10% temporary tariff imposed by the US on all trading partners for 150 days on February 24 is set to expire on July 24.Once the temporary levy expires, the US will need to implement a new tariff regime. Additional tariffs are imposed in addition to the Most Favored Nation (MFN) duty.Washington is currently conducting two Section 301 investigations involving several countries, including India, to determine its future tariff framework.
Section 301 investigation is underway
In March, the US Trade Representative launched two Section 301 investigations under the Trade Act of 1974 covering several countries, including India, over excess industrial capacity and alleged failures to eliminate forced labor from global supply chains.On June 2, the USTR proposed imposing a 12.5% tariff on imports from 54 countries, including India, for allegedly failing to ban goods produced through forced labor.The proposal has not been finalized yet. Interested parties can submit hearing requests and testimony summaries until June 22, while the hearing is scheduled for July 7.The findings of the second investigation are still awaited.
The business structure is being rearranged
The current talks are also taking place against the backdrop of changes in US tariff policy.On February 20, the US Supreme Court ruled against reciprocal tariffs imposed under President Donald Trump’s International Emergency Economic Powers Act (IEEPA), under which India was facing 50% tariffs.Following the decision, the US replaced those measures with a temporary 10% tariff regime that will remain in place until July 24.India and the US had earlier agreed on the framework for the first phase of the BTA in a joint statement issued on February 7.Under that framework, the US had agreed to reduce tariffs on Indian goods from 50% to 18%. It had also removed the 25% tariff imposed on Indian goods linked to purchases of Russian oil and was expected to reduce the remaining 25% tariff to 18% under the agreement.However, the Supreme Court decision changed the tariff landscape, prompting both sides to re-think elements of the framework.The February joint statement includes a provision that allows any country to modify commitments if the agreed tariff structure changes.
India seeks tariff edge over competitors
Sources have indicated to news agency PTI that gaining tariff advantage over competing exporting countries is a key objective for India.When the framework was initially agreed, Indian goods faced 18% tariffs, while competing countries such as Vietnam and other ASEAN economies faced tariffs between 19% and 20%.However, under the temporary US rule, all countries currently face the same 10% additional levy.According to sources, India wants the final trade agreement to restore a differential tariff structure that would provide Indian exporters an advantage over competitors such as Vietnam, Bangladesh, Pakistan and ASEAN countries.Such benefits would make Indian products relatively cheaper in the US market and potentially help exporters gain market share.
Trade relations remain strong
The US was India’s second largest trading partner in 2025-26.India’s exports to the US rose 0.92% to US$87.3 billion during the fiscal year, while imports rose 15.95% to US$52.9 billion.India’s trade surplus with the US declined to US$34.4 billion in 2025-26 from US$40.89 billion last year.